Fears rise among Scottish mid-market businesses about no deal Brexit

Alex Tait

Almost half (44 per cent) of Scottish middle market businesses surveyed by YouGov indicated that a no deal Brexit would be either harmful or catastrophic to their business, a 37 per cent rise over the previous quarter.

However, just over a quarter (27 per cent) said that a no deal outcome would be favourable or advantageous, although this was slightly down compared with the previous quarter.

Overall, Scottish business sentiment about the impact of Brexit on their performance over the next two years dropped to its lowest quarterly level since RSM started the survey in Q3 of 2017, registering just 90 on the RSM’s Brexit Monitor index.

Scottish businesses also hold an equally negative view of the two-year impact of Brexit on the UK economy, with the index registering its lowest ever score of 89.

However, viewed over a longer five-year horizon, middle market businesses in Scotland expressed a greater degree of optimism about the impact on their company’s performance with average sentiment just straying into positive territory with a score of 104.

On a national level, the top Brexit concerns for middle market businesses are concerns around the stability of their workforce (38 per cent); worries around future trading arrangements tariffs and import/export costs (34 per cent); while 21 per cent said they were concerned about the knock-on effect on consumer confidence.

When asked about actions taken to prepare for a no deal Brexit, the most common actions taken included increasing prices, adjusting supply chains and setting aside contingency funds. However, firms reported taking fewer actions to prepare than in the previous quarter.

Alex Tait, RSM’s regional managing partner for Scotland and Northern Ireland, said: “As the prospect of a no deal Brexit hangs over businesses in the Scotland, the reality of the impact is starting to materialise, and Scottish businesses seem worried. A no deal Brexit would be acutely felt in Scotland not least because of the impact it might have in key sectors such as financial services, manufacturing and tourism; but also the prospect of a second independence referendum.

“Interestingly, the closer we potentially get to Brexit, business leaders appear to be taking fewer steps to prepare. A sort of paralysis seems to have set in as everyone just waits to see what actually happens.

“However, Scottish businesses could be undertaking some key scenario planning to ensure they are either ready for material eventualities or have identified the key risks; and have taken a considered view on whether they do something or not based on that work.”